- WTI bulls take charge and move higher within daily correction.
- Bears moving aside as price takes out daily resistances.
The price of oil is climbing in recent trade as the US dollar sinks on what could be a final shake out into the Jackson Hole that starts on Thursday.
WTI spot is now over 1% higher on the day following a move up from $66.95 to a high of $68.39.
Investors are nervous holding onto US dollar longs ahead of a keynote speech from the Fed’s chairman, Jerome Powell.
Markets are anticipating critical clues as to the timings of a taper which could be announced as soon as Friday. However, such expectations have been recently dialled down due to the risks posed by the spread of the Delta variant.
Fed hawk Robert Kaplan threw a spanner in the works for the US dollar bulls last week which ultimately led to a rise in commodity prices on the back of a combination of a softer greenback and improved risk appetite.
Kaplan indicated that a rise in Delta cases could make him re-think the timing of his support for tapering. Markets would speculate that the rest of the hawks would most probably align with such sentiment.
With that being said, going forward, delta worries may simultaneously increase the safe-haven appeal for the USD. Nevertheless, it has been a negative input for the greenback near term.
Meanwhile, specifically for the oil market, inventories of commercial crude in the US fell for the third consecutive week.
Oil stockpiles fell by 3 million barrels to 432.6 million barrels in the week ended Aug. 20, the Energy Information Administration said Wednesday.
Supplies were about 6% lower than the five-year average for this time of year. Market expectations were for a supply decrease of 2.7 million barrels. A week earlier, inventories slid by 3.2 million barrels.
The EIA said gasoline supplies decreased by 2.2 million barrels, about 3% below the five-year average for this time of year. A week earlier, gasoline inventories rose by 700,000 barrels. Distillate fuel inventories increased by 600,000 barrels, 8% below their five-year average.
Crude imports fell by 193,000 barrels per day last week to an average of 6.2 million barrels. Imports averaged about 6.3 million barrels a day over the past four weeks, 8.8% above the prior-year print.
Gasoline production was 10.2 million barrels, up from 10 million barrels a week earlier.
Additionally, there has been a bid on the back of India’s higher crude oil imports and processing in July as coronavirus restrictions have been lifted both there and in China.
”Energy markets are posting a spectacular performance as China’s ‘Zero-Covid’ strategy appears to have quickly contained the outbreak,” analysts at TD Securities noted.
”With recent disruptions in the Middle Kingdom likely to prove short-lived, the impact on Chinese energy demand may underwhelm relative to recent fears.”
”After all, real-time tracking of road congestion data in Asia suggests that traffic has edged higher after stabilizing in the last week.”
WTI technical analysis
The bulls have taken out old supports and now eye a test of the daily counter-trendline and between the 69.50/71 territories.